HONOLULU—NCUA is undertaking a “deep dive” into every NCUA regulation, seeking to improve, streamline and create more efficiencies within NCUA rules, the agency’s acting chairman, J. Mark McWatters, told NAFCU’s 50th Annual Conference here.
NCUA’s move follows the Trump administration’s executive order calling for a review of existing rules. McWatters noted that the executive order does not officially apply to NCUA, since it is an independent regulator, however the agency is abiding by the “spirit” of the order.
McWatters described for the NAFCU meeting agency goals and steps NCUA has already taken to reduce burdens and better align regulation with the realities of 2017. NCUA, he said, has made changes to streamline the examination process, and staff is carefully studying the possibility of closing the Stabilization Fund this year. The agency is reviewing its operational structure and budget to find economies.
The over-arching goal, McWatters said, is to provide credit unions with an efficient regulatory structure that returns decision-making to the ground level while adhering to NCUA’s statutory duty to protect America’s 108 million credit union account holders.
McWatters covered a variety of credit union topics during his remarks to the meeting. He noted the Treasury Department report on regulatory reform released Monday and said he was pleased the report’s recommendations regarding NCUA and the credit union system followed the direction the agency has set for itself. The plan released by Treasury was comprehensive, substantive, and practical and, with respect to its recommendations concerning credit union regulation, is consistent with the policies NCUA is advancing, McWatters said.
McWatters has said that, in particular, he wants the board to revisit the risk-based capital and stress testing rules.
Closing the Stabilization Fund in 2017 remains a top priority, McWatters said, noting NCUA staff has been working on a plan that the agency’s board expects to receive in the coming weeks. That closure would begin the process of returning surplus funds to federally insured credit unions through a Share Insurance Fund dividend in 2018.
McWatters said the Board has already acted on items in his agenda, approving proposed rules to provide greater member communication in voluntary mergers and to improve the appeals process. He also wants to act in the areas of cyber security, combatting fraud, and finding ways to help smaller and low-income credit unions thrive.
McWatters, again, addressed the new merger rule the agency has proposed.
As CUToday.info reported, the NCUA board has put out for comment a proposed rule aimed at providing greater transparency to members of federal credit unions that are seeking a voluntary merger when it comes to benefits and compensation that may be paid to executives and board members of the CU that is being acquired.
The proposal also provides for better opportunities for members of a CU considering a merger to communicate with each other. The rule would require disclosure to members of any substantive compensation and benefits changes that would be paid to the five highest-paid employees, as well as members of the board and supervisory committee, that are the result of the merger agreement.
At the NAFCU meeting McWatters noted that it is not uncommon for a tenured leader to receive compensation for years of service when a small CU is merged into a larger one.
“In many cases this compensation is well deserved,” McWatters told the meeting, adding that the point of the proposed rule is not to prevent this compensation from occurring. “The point of the rule is to disclose this compensation and let the members decide if it is appropriate when they vote.”